FCA launches inquiry into financial advisers’ ongoing services

February 16, 2024

The Financial Conduct Authority (FCA) has initiated a comprehensive survey involving 20 of the largest financial adviser firms.

This inquiry seeks to scrutinize the delivery and effectiveness of ongoing services for which clients are charged even after receiving initial advice. This action underscores the FCA’s commitment to ensuring that financial advice firms adhere to the newly introduced Consumer Duty principles, focusing on good faith, prevention of foreseeable harm, and the support of clients’ financial goals.

The FCA’s investigation revolves around several critical areas. It queries firms on their evaluation of ongoing services post-Consumer Duty introduction, modifications made in response, and the extent to which clients are receiving the reviews they are due. The survey also explores instances where clients paid for advice but were refunded due to the absence of a suitability review. This data collection effort is pivotal for the FCA to determine the necessity of further regulatory actions in this domain.

The selection of firms for this survey is strategic, aimed at garnering a comprehensive understanding of market practices without implying specific concerns. This approach follows previous communications by the FCA, highlighting worries about firms not fully considering the relevance, nature, and costs of ongoing services.

Additionally, the FCA has previously communicated expectations regarding the Consumer Duty, emphasizing the importance of firms acting in their clients’ best interests.

In December 2023, a Consumer Duty webinar highlighted instances where consumers may not have received the services they paid for, such as annual reviews, raising questions about the value and effectiveness of these ongoing services. This inquiry is part of the FCA’s broader strategy, announced in 2021, to elevate standards within the consumer investment market, ensuring that advice is accessible, trustworthy, and aligned with consumers’ financial aspirations.

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